What Do We Measure When We Measure Time Discounting? The Impact of Wealth, Growth Rate and Financial Market Accessibility

Thorsten Hens, Marc Oliver Rieger and Mei Wang

Chapter 3 in Cultural Finance:A World Map of Risk, Time and Money, 2020, pp 65-81 from World Scientific Publishing Co. Pte. Ltd.

Abstract: When eliciting time preferences with typical trade-off questions between the present and the future, we do not measure only the discounting factor. Instead, there are several other factors that may influence answers. This is, on the one hand, due to the shape of the subject’s utility function, and, on the other hand, due to the possibility to “hedge” choices by saving or taking a loan. In this chapter, we develop theoretical predictions for the impact of wealth, growth rate, and risk aversion on preferences between intertemporal choices. In our model, access to financial markets is limited (a crucial factor leading to very different predictions as compared to the classical case of complete market access). We confirm the predictions of our model using data from a large international survey on time discounting, conducted in 53 countries.

Keywords: Finance; Culture; International; Time Preferences; Risk Preferences; Decision Theory (search for similar items in EconPapers)
JEL-codes: D9 E7 G4 Z1 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.worldscientific.com/doi/pdf/10.1142/9789811221958_0003 (application/pdf)
https://www.worldscientific.com/doi/abs/10.1142/9789811221958_0003 (text/html)
Ebook Access is available upon purchase.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:wschap:9789811221958_0003

Ordering information: This item can be ordered from

Access Statistics for this chapter

More chapters in World Scientific Book Chapters from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().